When Accounting for Pensions, Delayed Recognition of Gains and Losses

question 126

Multiple Choice

When accounting for pensions, delayed recognition of gains and losses in earnings achieves:

• A) Income averaging.
• B) Expense averaging.
• C) Income optimization.
• D) Income smoothing.

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Definitions:

Expected Rate of Return

The average return that an investor anticipates to earn on an investment, considering all potential outcomes and their probabilities.

Expected Return

The weighted average of all possible returns for a given investment, considering the probabilities of each outcome.

Standard Deviation

A measure of the dispersion or variability of a set of data points or investment returns, indicating the degree of risk or volatility.

Risk-Free Asset

An investment with a guaranteed return and no risk of financial loss, typically represented by government bonds.